[VLC Tutorial] Automatically Expanding Media Library Folders || UPDATE : READ COMMENTS/DESC
UPDATE (5/18/2020):
Instead of setting "recursive=expands" , you must set "recursive=expand"
I don't know if this was an error on my part when I made this video a year ago or if the setting used to be expands rather than expand, but this should fix your problem.
If you don't want to edit the vlcrc file yourself, you can also do this within the VLC GUI by doing the following:
1) Navigate to Tools - Preferences (or hit Ctrl+P)
2) In the bottom left corner, set "Show settings" to "All"
3) Select "Playlist" within the left panel
4) At the bottom of the right-hand side, set "Subdirectory behavior" to "Expand"
5) Restart VLC